Contracts I
Prof. Vallario
Studies in Contract Law 8th Edition, Ayres Klass
Fall 2013
Table of Contents
I. Introduction
A. Mutual Assent –
II. Offer and Acceptance
A. Offer –
B. Types of Offers –
C. Acceptance by Promise –
D. Acceptance by Performance –
E. Acceptance by Silence –
F. Mailbox Rule –
G. Mirror Image Rule –
H. Destruction of Power of Acceptance –
I. Irrevocable Offer: Option Contracts –
J. Offer and Acceptance UCC
K. Battle of the Forms-Terms –
L. Firm Offers –
M. Insufficient Agreements –
III. Consideration
A. Bargained for Exchange –
B. Waiver of Claims –
C. Pre-Existing Duty/Modification – Law of modification
D. Pre-Existing Duty/Modification UCC –
E. Illusory Promises or Implied Duty –
F. Moral Obligation –
G. Promissory Estoppel –
H. Option and Requirement Contracts
IV. Statue of Frauds –
A. Compliance
B. UCC
I. INTRODUCTION
A. Issue
1. Mutual Assent
B. Rule
1. Restatement § 18
a) Manifestation of mutual assent to an exchange requires that each party either
(1) make a promise or,
(2) begin performance or,
(3) render a performance
2. Restatement § 3
a) An agreement is a manifestation of mutual assent on the part of 2 or more persons
b) A bargain is an agreement to exchange
(1) promises
(2) or to exchange a promise for performance
(3) or to exchange performances
3. Rule of Law – CL
a) The assent necessary to form a contract will be imputed to a person based on the reasonable meaning given to his words, acts, rather than depending on his unexpressed intentions.
b) Can assent by conduct, spoken words, other acts or failure to act.
4. Exceptions
a) Contracts can be voided if the party does not assent but conduct shows he does as a result of fraud, duress, mistake, or other invalidating cause.
b) If you one party is drunk K is void i
(1) f the other party took advantage of him to make K.
(2) Level of intoxication needs to deprive him of understanding or ability to act rationally. Just buzzed does not count!
C. Analysis
1. Mutual assent (both parties) is required to make a K, by terms not hidden intent. But, mental assent is not.
2. Mutual assent is objective determination based upon OTK and reasonable man.
3. Example
a) Lucy v Zehmer, A guy jokes to his friend about selling his house, but the joke is not clear and internal and friend intended to buy and got the money ready thinking seller was serious. Seller acted like he was serious, internal motive not relevant.
D. Issue
1. Implied In Fact K
E. Rule
1. Rule of Law – CL
a) An implied in fact K may not be found where intent to contract is lacking
F. Analysis
1. Implied in fact K occurs when parties appear to enter into a contractual relationship
a) For example, getting your hair cut is a K you intend to pay for the haircut.
2. Case example
a) Bailey v West, Bailey volunteered to take care of horse, owner never talked to him and Bailey knew the ownership was in the air. West’s agent was told to dump the horse not to send for care. No K no agreement.
G. Issue
1. Volunteer recovery
2. Quasi – K
H. Rule
1. Ruel of Law – CL
a) A mere volunteer may not recover under a theory of a quasi-K for the value of services rendered.
I. Analysis
1. A quasi-K is imposed by law to avoid unjust enrichment
2. Where a benefit is conferred which aids the defendant, courts hold that it is inequitable for him not to pay for it.
a) For Example,
(1) A person is knocked out and a doctor stops and helps, the doctor can recover.
(2) But, when a service is rendered gratuitously without being requested there is no K.
3. Exceptions
a) When benefits are conferred by mistake and the defendant accepted them knowing plaintiffs error.
(1) Example
(a) A painter paints wrong house, the home owner finds out and before the work is done allows the painter to complete the job because he likes the paint. There is a K and home owner pays up.
II. OFFER
A. Issue
1. Offer
a) Preliminary negotiations
b) Offer defined
B. Rule –
1. Vallario
a) Offer creates the power of acceptance in the offeree
b) Offeror has the power to revoke offer
c) Ads do not create power of acceptance just an invitation to bargain
(1) Exceptions apply – Lefkowitz
2. Restatement § 24 – Offer defined
a) An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.
3. Restatement § 26 – Prelim. Negotiations
a) A manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent
4. Restatement § 29
a) The manifested intention of the offeror determines the person or persons in whom is created a power of acceptance
(1) It can be a specific person, or more than 1 person, or anyone who makes a specified promise or renders a specified performance
C. Analysis
1. Exceptions to advertisements
a) An ad is usually not an offer that creates a power of acceptance, unless…
b) If the ad is clear, definite, and explicit, and leaves nothing to negotiation is an offer, acceptance of which creates a binding contract.
(1) Le
s v Jacoby
(1) This case disputes if an offer was unilateral or bilateral. It was a bilateral contract. Old man was dying and hoped that a friend and his wife would come and take care of him and his dying wife. The old man died before performance was rendered. The friends took care of the old lady until she died. The offer was bilateral a promise to take care of old for their estate.
K. Analysis – Unilateral
1. Example
a) Lost cat advert – If you find my lost cat, and return him to me safely I will pay $100.
b) Owner has made a promise but not sought a promise in return. The offeree is free to stop at any time looking for cat and is not held liable.
c) K is not concluded until requested performance is complete.
d) The offeree is free to abandon his search
e) Exceptions- Reliance.
III. ACCEPTANCE
A. Issue
1. Acceptance (Communicating acceptance, Revocation)
B. Rule
1. Restatement § 35 – Power of Acceptance
a) An offer gives the offeree continuing power to complete the manifestation of mutual assent by acceptance of the offer.
b) A K cannot be formed by acceptance of an offer after the power of acceptance has been terminated.
2. Restatement § 30 – Form of Acceptance
a) An offer may invite or require acceptance to be made by an affirmative answer in words or by performance or forbearance,
b) or may empower the offeree to make a selection of terms in his acceptance
c) Unless otherwise indicated by the language or circumstances, an offer invites acceptance in any manner and by any medium reasonable in the circumstances.
3. Restatement § 36 – Methods of termination
a) An offeree’s power of acceptance may be terminated by:
(1) rejection or counter offer
(2) lapse of time
(3) revocation by offeror
(4) death or incapacity
b) In addition acceptance can be terminated by the nonoccurrence of any condition under the terms of offer.
4. An offer can be accepted only by a person whom it invites to furnish the consideration.
5. Restatement § 56 – Acceptance by promise
a) It is essential to an acceptance by promise that the offeree exercise reasonable diligence to notify the offeror of acceptance or that the offeror receive the acceptance seasonably.
